Newsletter

Pipeline may come to Ladd Landing; coal terminal won’t

After its May decision to stop seeking permits, Delaware-based PacRim Coal is giving up what had been a key piece of property in its plans to strip mine coal from the west Cook Inlet’s Chuitna River region.

PacRim planned to export coal from the area through a loading terminal it would build on the Kenai Peninsula Borough-owned shore property known as Ladd Landing, which it began leasing from the borough in September 2009. The Kenai Peninsula Borough Land Management office is now terminating the PacRim lease and discussing another use of the beach property with oil and gas company Hilcorp, according to Kenai Peninsula Borough Land Manager Marcus Mueller. Nothing is yet certain, however.

“The management of Ladd Landing for the last 30 years has been based on the PacRim lease and their plans,” Mueller said. “With that going away, there isn’t a particular management plan in place for that land. In the future the borough will need to take a look at what its management goals are.”

The bourough originally gave an option to lease Ladd Landing in 1987 to Tidewater Services Corp, which carried the option through a merger with Midgard Energy in 1994. PacRim took on the opton when the company formed in 2006. Mueller said the previous entities had also been associated with PacRim’s investors — Texas oil billionaire William Herbert Hunt and rancher, businessman, and Utah ski resort owner Richard Bass, who in partnership with various companies had planned to mine the Chuitna region’s coal field since the 1970s.

The option to lease gave its holder priority consideration in actually leasing the property, and since giving it to Tidewater the Kenai Peninsula Borough Assembly voted five times to extend the option agreement for five years. After PacRim acquired the option, the assembly voted in March 2003 for a one-year extension of the option, giving PacRim until April 2010 to take the lease before it would become available to other groups. Three weeks later PacRim representatives emailed then-Borough Mayor Dave Carey of their intent to enter a lease agreement. By September 2009 the two parties had signed the lease, extendable for up to 50 years. The borough began collecting annual lease payments from PacRim after the signing.

Conservation and salmon activists protested the Chuitna Coal Project because it would strip-mine through several Chuitna River tributaries in which salmon spawn and rear, saying PacRim’s plans to restore these streams after mining them were dubious. The terminal at Ladd Landing drew particular criticism from holders of nearby setnet leases, who feared the beaches where they fished would be polluted with coal dust from a seven-mile elevated conveyor belt PacRim planned build from the mine to the Ladd Landing terminal.

After 11 years of planning, PacRim’s investors announced they were suspending the Chuitna Coal Project’s state permitting in May 2017. In a May 22, 2017 letter to Mueller, PacRim vice president Joe Lucas wrote that “because PacRim does not intend to initiate any activities, it is PacRim’s desire to terminate” the Ladd Landing lease. The borough land management office is presently drafting the termination agreement. The lease option will also end with the termination — Mueller said there will “be no further contractual relationship” between PacRim and the borough.

The plan, which Hilcorp Alaska Senior Vice President David Wilkins announced in May, involves changing the flow through an existing cross-inlet pipeline from natural gas to oil, rerouting the gas flow through another existing pipeline that presently connects Hilcorp’s offshore Tyonek Platform to the east inlet shore. Sending the gas onward from the platform into the west Cook Inlet’s onshore pipeline system requires laying about six miles of new pipe, which would come ashore at Ladd Landing.

“We’re in discussion with Hilcorp on that, and we don’t really know what that scope looks like,” Mueller said.